If you are considering a home purchase or are thinking about re-financing your home, consider an FHA mortgage.  FHA loans let you buy or refinance your home using government backed funds.   The down-payment requirements are low and in many cases allow home-buyers to get into a home for no money down.

What is an FHA Mortgage?

FHA mortgages are also know as government mortgages because they are backed by the Federal Housing Administration and are therefore insured by the government.

What if I Have Bad Credit? 

You do not need good credit to get a FHA loan.  At the same time your credit has to show some level of responsibility.  If you have had credit problems in the past FHA is a good alternative to get you on the path of homeownership.  It is also a good option to consider when re-financing your home to get out from under a sub-prime mortgage.  Many people are not aware that FHA loans are available as a refinance option.  There is no minimum credit score requirement, however, it is always advisable to put your best foot forward.  One of the free services that I offer is a no obligation credit analysis. Sometimes the credit repair is can be easily fixed.  In other cases I'll be able to refer you to excellent self-help resources and help you with letter writing.  I also have access to a reputable and affordable credit repair service that helps people get credit back in line in as little as 75 days.

Do I Need a Down Payment?

FHA Loans require that the homeowner contribute 3% of the home purchase price.  FHA allows the seller to contribute 3% of the selling price.  This is done by having the seller contribute money to a local down payment assistance program. The down-payment assistance program will then make the down-payment on your behalf.  This is a common aspect of FHA loans.  If you seller is not willing to work with you you may want to find a different home.  Talk to your Real Estate Agent or schedule a meeting with me and your Real Estate Agent to discuss how this works.  It's really very simple but it does require some work and understanding of the process.

 How Much Do I Need For Closing Costs?

This depends on if the seller is willing to help you with the downpayment.  It is entirely possible to purchase a home with a FHA Loan with no money down.  You need to make sure that you are working with a Loan Officer that take the time to structure the FHA loan in your favor.  In addition you want to work with a Realtor that understands your goals and why you want to buy with an FHA loan.

Do I Need to Live in the House?

Yes.  FHA loan programs are not for investors.  This loan is for owner occupied and as they are designed to help people get into their first homes.

What Will My Payment Be?

Your payment will depend on the price of the home.  I will be happy to spend a few minutes talking to you to help you determine the right price range for you.  It depends on your income, how much debt you have, and your comfort level.  Just because you can afford a $2000 house payment, doesn't mean that you're comfortable with that payment.  It only takes a few minutes and both you and your Realtor will have the information that you need to make sure that you're looking at the right homes for you.

What If I'm New at My Job?

While job history is important and FHA usually requires 2 years of employment, there are compensating factors.  A good loan officer will ask you questions and will help develop a loan package that will likely be approved.  If you have been in school, and are now employed in your field of expertise, that school can be counted as part of the two years employment.  It's a matter of having a loan office who will take the time to explore the options and present them in a way to help ensure approval.

Am I Guaranteed an Approval?

No - you are not.  There are three compensating factors to getting approved for a FHA loan.  Credit, Income and Employment History.    You cannot be weak in all three and expect to get an FHA loan.  Sometimes it's a matter of your loan officer helping you write a letter of explanation.  Other times, it's best to wait a while and get help fixing your credit, decreasing your debt.

What's important is putting together a plan and a strategy to get you on the path to homeownership or to get you into a position where you will be able to refinance your existing home.  FHA is a great tool, but it's not the only option available.  Feel free to contact me regarding your unique situation.  I'll work with you to help you find the right solution for your individual needs.

Consult a good Mortgage Broker or Loan Officer and connect with a solid experienced Real Estate Agent to help you through the home-buying and loan process.

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Kate Bourland is a Loan Consultant for New Key Home Lending, in Redding, CA.  She services Redding and surrounding areas including Anderson, Weaverville, Red Bluff, Shingletown, Cottonwood and Chico.  She helps homeowners and Realtor's solve problems.  She has solutions that include all types of real estate loans, debt elimination and credit repair.  Whether you are a first time home buyer or an experienced investor Kate will spend take the time to find solutions for your lending needs.  She can be reached at 530-244-4345.